Buy versus rent

[Rich Toscano]

[quote=FlyerInHi]BG, just what are your bearish about? Certainly not housing![/quote]

Haha, I was wondering the same thing!

[mixxalot]

Well I’ve been watching real estate prices for a long time and they go up then down then up. We are in an up cycle so may be better to wait and see to buy when at next crash.

[Coronita]

[quote=mixxalot]Fed highly likely to raise interest rates soon in June which if mortgage rates skyrocket will put a dent in real estate prices hopefully.[/quote]

I don’t think rates are not going to skyrocket. Ditto for mortgage rates. if at all, the Fed will probably string along a occasional blip of interest rates over a long period of time. Afterall, the Fed doesn’t want the markets to crash, and they seem to be hell bent on propping up the markets

After Fed raised rates, mortgage rates didn’t skyrocket. Today’s rate is lower than it was right before Fed raised the rates. And certainly, weren’t not seeing a steep drop of buyers interested. How mortgage rates relate to Fed rates? People seem convinced they move in lock-step. I’m not so sure what the correlation is.

My take on housing is more if it has to do with what goes on in people’s mind. If there’s fear on the street because of widespread uncertainty, then that probably will put a dent in people’s appetite. If rates are trickling up but people feel comfortable with their job/career/paycheck situation, and banks still qualify them, I don’t think that will put a dent in people’s appetite for buying. People were saying that large Qualcomm layoff was going to put a dent in housing. t didn’t make a difference, did it?

You got the strongest buyers right now holding on to the houses, purchased at the lowest prices, and maybe purchased with the cheapest loan products in history. In a game of poker, this would be almost equivalent to someone holding onto a royal flush. Almost.

Mortgage rates are not going to affect people who already bought and making their payments on their house. Their cost is fixed. And even if there is a slight depreciation on their house, they aren’t going to sell to “take a loss” only to buy another house, now with a new loan with higher interest.. because their payments on that smaller house with higher interest probably ends being the same as their previous loan on the older house that is underwater.

Me? I’m not selling anything anytime soon. Unless I get more than 100% appreciation, then I might consider it. Getting close on one. So maybe in that case. So multiply people like me with others that bought and were stacking them when rates were low, prices were low, and now rents are high…There is very little motivation to sell in the near future. That’s the problem with inventory.

[mixxalot]

Well since I work from home, I may decide to buy cheap property outside of San Diego which will free up money for an airplane to take fun trips across the country. Prices are far less expensive outside of SD, LA, OC, and SF/bay area.

[moneymaker]

flu, I think you nailed it above. Many people are not selling, hence low inventory. History may show however that now was the perfect time to sell. If I were a landlord then I would be very tempted to sell now, in my mind now is the perfect time to sell. It’s a very individual decision however and depends on lots of variables for everyone.

[livinincali]

I think affordability will matter at some point. We can try to rationalize why it’s different this time but it seems pretty unlikely that it is actually different this time. How we get to the historical average of affordability in San Diego remains to be seen but it’s pretty likely we’ll get there. Even if it’s at a slightly higher number than the previous historical average.

[mixxalot]

My living cost would double or triple owning versus renting so what’s the point ?

[ltsddd]

QED

[an]

[quote=mixxalot]My living cost would double or triple owning versus renting so what’s the point ?[/quote]
You’re right. That ratio is not sustainable. Which mean in the long term, either price will fall or rent will rise.

[mixxalot]

True but at some point in the future, QED will no longer work. Same for raising rents. Incomes can only support both until a maximum level when it will collapse. It did last time. Will happen again as well. And the Chinese favor OC, LA, SF bay area versus most parts of San Diego.

[mixxalot]

How come nobody wants to sell their San Diego home, cash in and retire out of state? Thats what I’d do if I was sitting on a gold mine of equity.

[HLS]

Perhaps many of the people with a ‘gold mine’ of equity are already retired. Why bother moving ?

Selling only gets ya $500,000 tax free for a couple if they qualify…
sell,, pay taxes..move.. May as well stay put.

Some people are leaving, you just don’t hear about them as the secret is where they are going to

[mixxalot]

Many are leaving for safe havens in places like Costa Rica and New Zealand.

[FlyerInHi]

Costa Rica (or overseas in general) is not cheap if you want all the comforts of American life. It’s cheap only if you live like a local.
Actually, the USA is cheapest. You can live in Pensacola for cheap.

But, of course, the lifestyle abroad is more fun for Americans with money who are treated like mini celebrities.

It’s interesting that, housing wise, we are really the cheapest place on earth, ppsf wise and quality of infrastructure wise.

I bought a 1 bd in Vegas for about $25k (can’t anymore) in a downscale, but decent, safe complex, near UNLV, 10 min from the Strip. Nowhere in the world can you buy that and have AC, pool, reliable public untilities, etc… I remodeled for about 5k and it now looks like a nice, bright Scandinavian condo. I could like there if I want to live for cheap. My monthly expense would not exceed $1000 (HOA, untilities and all living expenses)

[an]

[quote=mixxalot]How come nobody wants to sell their San Diego home, cash in and retire out of state? Thats what I’d do if I was sitting on a gold mine of equity.[/quote]If you want to cash in on that gold mine, why not just do a reverse mortgage or cash-out refi instead of selling and moving? You’re already living in paradise, why move, if your only reason is to cash in on the gold mine?

[Author]

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